Apple to Elect Board by Majority After Investor Pressure

Tim Cook, chief executive officer of Apple Inc., speaks during an event at the company's headquarters in Cupertino, California. Photographer: David Paul Morris/Bloomberg

Feb. 23 (Bloomberg) -- Apple Inc., bowing to pressure from
the California Public Employees’ Retirement System and other
shareholders, agreed to start electing its directors by majority
votes rather than a plurality.

Chief Executive Officer Tim Cook, speaking today at an
annual investor meeting, also said Apple was continuing “active
discussions” about what to do with its $97.6 billion in cash
and investments, saying the cash hoard was “more than we need
to run a company.”

Investors at today’s meeting passed a nonbinding measure in
favor of the board-election change. A similar initiative was
approved at the gathering last year, though it wasn’t adopted by
Apple. The company changed its stance after previously saying
that the change would cause board members to lose their seats in
cases where too few shareholders cast votes.

Some investors also are demanding that Apple return cash to
investors in the form of a dividend or stock buybacks. The money
pile, which includes short- and long-term investments, has risen
more than 63 percent since last year’s annual meeting of
shareholders.

“The board and management team are thinking about this
very deeply,” Cook said.

Dividend History

Apple last paid a dividend in 1995, before co-founder Steve
Jobs returned as CEO and revived the struggling company.
Dividends provide a recurring payment to shareholders, typically
each quarter.

The move would provide a long-term boost to Apple’s stock
price by bringing in a new class of investors who only buy
shares in companies with a dividend, according to Toni
Sacconaghi, an analyst at Sanford C. Bernstein & Co.

In the years since Apple last offered a dividend, the
introduction of the iPod, iPhone and iPad have turned the
company into a profit engine, letting it accumulate a stockpile
of cash and investments that exceeds the market value of
Citigroup Inc. Jobs had long spurned calls to return the money
to investors.

Shares of Cupertino, California-based Apple rose less than
1 percent to $516.39 at the close in New York. The shares have
climbed 28 percent this year.

Main Liaison

The meeting was the first since the death of Jobs. Even
before Cook’s promotion to the top job in August, Cook served as
Apple’s main liaison to shareholders, a role Jobs avoided.

Investors also voted down a proposal calling for Apple to
release a “conflict of interest report” that outlines how
board members may financially benefit from company decisions.
Another rejected measure would have asked Apple to release a
report on its political contributions and expenditures. The
company opposed those initiatives.

Cook said Facebook Inc., the world’s largest social-networking company, is more of a “friend” than a competitor.
Apple and Facebook “could do a lot more together,” he said in
response to a question from a shareholder.

Turning the conversation back to cash, an investor asked
whether Apple would consider using its cash to buy Greece, which
faces a debt crisis.